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B2B Opportunities and Threats -Cooperate to Compete in the Supply Chain

B2B Opportunities and Threats -Cooperate to Compete in the Supply Chain. Douglas Macbeth 3Market. February 2010. Key messages. The Supply Chain is a integrated view of the world and recognises flows and interaction as crucial

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B2B Opportunities and Threats -Cooperate to Compete in the Supply Chain

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  1. B2B Opportunities and Threats -Cooperate to Compete in the Supply Chain Douglas Macbeth 3Market. February 2010

  2. Key messages • The Supply Chain is a integrated view of the world and recognises flows and interaction as crucial • Purchasing / supply chain actions impact on cost reduction and value enhancement • We need to promote joined up thinking across all organisational boundaries, internal and external • A long term market commitment allows cooperative thinking and action

  3. General position statements Very few organisations can do everything themselves so they must deal with external providers of goods and or services. In order to satisfy the customer the focal supply company must manage the external suppliers! Suppliers have complementary skills which customers need. Suppliers need to want to support you to deliver the whole package to your customers – it is more than a contract .

  4. Organisational tasks Materials Resources Acquire Finished goods Capability / capacity Design Actual Transform Virtual Physical Deliver Informational In-chain Re-cycle 3rd party Understand Customer Needs You do not need to own all of the factors of production You need to be sure that they are activated when you need them

  5. Toyota Supply Chain Structure Tier 1 Tier 2 Tier 3..n

  6. Where can the SME or social enterprise fit? • Not first tier • Supplier to other suppliers • Local support • Innovative and fast response • Complement others • Work together to create a bigger ‘Virtual Organisation’ and bid for bigger projects

  7. Managerial Control: Partners • Have capabilities you have chosen not to invest in • Partners are separate legal entities who have their own stakeholders to satisfy • Partners will only really cooperate if it is in their business interest to do so and only if there is a real prospect of business continuity • Once committed, partners need to work interactively to maximise their mutual benefit according to agreed formulae • The business to business relationship needs careful construction and control

  8. Partnering Definition • Continuity over extended timescale • Complementary capability • Share future orientated data • Consider mutual impact of decisions • Waste removal + innovation enhancement • Operating principles agreed up front • Make a margin but REDUCE REAL COST and add real value

  9. Challenges about internal capabilities • How do you qualify as a supplier? • Can you solve a customer’s problem • What is your unique value proposition? Is it built at the design or assembly end of the physical chain or is it service based? Why would anyone do business with you? • What capabilities do you have or can you develop? • How do you develop and protect them? • Do you know how to manage key customer relationships? • Do you need to build alliances with other suppliers to be big enough to be considered for contracts?

  10. Selecting partners • Capability to support and invest • Attitudes to the world • Timescales • Importance to future success • Strategic direction • Success criteria • Information availability and completeness

  11. "FRED ASTAIRE IS SOGREAT. I DO EVERYTHING HE DOES, ONLY BACKWARDS AND IN HIGH HEELS." Choosing who to dance with? • Intellectual Property • Closeness to Customer • Manage Relationships • Risk & Reward share • It doesn’t matter who leads.. both have to dance.. together

  12. Competitiveness - Determining Factors • Product / Service • Business structure • Relationships • Infrastructure • Innovation

  13. Recommendations • Choose your supply partners carefully (80:20 rule .. The Important Few) • Do what customers want and need… if you can make a margin! • If you need suppliers long term help them make a margin • Flexibility based on response and lowest total cost but manage carefully upstream • Outsource? non core business activity? But watch your Intellectual Property • Enhance the revenue supporting proposition • Agree the operational principles up front • Manage and challenge the relationship performance

  14. Thank you dkm@soton.ac.uk

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